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Microsoft Buys AVIcode

Microsoft on Wednesday announced the acquisition of Baltimore-based AVIcode Inc., a provider of .NET application performance monitoring software.

The financial terms of the deal were not disclosed, but a TechFlash article pegged the purchase price at under $50 million. Microsoft intends to make AVIcode a wholly owned subsidiary and plans "to bring a number of AVIcode employees to Microsoft across most functions of the company," according to a Microsoft FAQ page for AVIcode customers.

Microsoft's announcement of the deal is notable after various press accounts have said that Microsoft has made 15 secret buys this year. The secret buys weren't named except for one, virtual world software company Vivaty.

Microsoft is acquiring AVIcode, a privately held Microsoft Gold Certified Partner, to provide better diagnostics for its software-as-a-service offerings. Those services currently are offered through Microsoft's hosted Exchange/SharePoint Business Productivity Online Suite and Xbox Live. Microsoft also offers a hosting platform via Windows Azure.

According to a Microsoft-produced interview with Brad Anderson, Microsoft's CVP of the Management & Security Division, Microsoft had considered acquiring AVIcode for about nine months before making the purchase decision. AVIcode's application performance monitoring software was already integrated in a number of Microsoft products, particularly System Center Operations Manager 2007 via a .NET management pack. Microsoft's Xbox Live team was already using AVIcode's solution to help track the performance of the Xbox Live hosted gaming experience and had been doing so for about two years.

The AVIcode solution helps monitor application performance by drilling down to the affected components in cloud platforms. In the case of Xbox Live, it tracks how service level agreements are being met. That capability plus its integration with Microsoft products led to Microsoft's acquisition decision, Anderson explained. AVIcode can track issues regardless of where the app runs in the cloud, in both public and private clouds.

AVIcode also integrates with Opalis management software, Anderson said. Last year, Microsoft announced the acquisition of Opalis Software with the intention of integrating Opalis' automated management solution for datacenters into various Microsoft System Center products.

According to Microsoft's FAQ, AVIcode's solution also integrates with Microsoft BizTalk Server through a management pack. BizTalk is Microsoft enterprise service bus-type product designed to help deliver applications to end users as services. AVIcode's solution also works with Microsoft Office SharePoint Server 2007 via a management pack. For SharePoint, AVIcode's solution helps track performance, connectivity, security and application failures.

AVIcode customers will be supported by AVIcode throughout the transition. Microsoft plans to announce further details "over the coming weeks," AVIcode CEO Mike Curreri explained in a blog post.

Things may be looking up for AVIcode. Last year, Curreri slashed compensation for AVIcode employees. However he followed through with a promise and cut his hair after AVIcode's performance met its third-quarter goals.